Monthly roundup - June 2010
Special new financial year edition
In this edition:
- Special new financial year highlight: Changes ready to go for 30 June financial reports – well, almost
- New pronouncements
- Standard-setter meetings
- New Deloitte publications
- Other developments
Special new financial year highlight: Changes ready to go for 30 June financial reports - well almost
Financial reporting reform can be a funny thing. Noble causes and the promise of positive change often finds itself caught up in process, and in this case, the addition of the most intriguing political developments in recent times. The cut and thrust of politicking and competing priorities saw hopes rise and fall in time to a different beat than many accountants are accustomed to in the setting of the financial reporting framework.
Notwithstanding the hurdles, at least some of the promised changes in 30 June reports have been enacted and will apply at 30 June 2010. Changes to the Corporations Act 2001 were passed on the momentous last sitting day of the Winter sitting - and some speculate, the current Parliament.
In the end, the Bill to amend the Corporations Act went through both houses of Parliament in less than twenty minutes, in total. Less than twenty minutes of Parliament’s time theoretically means innumerable hours of savings for accountants. Or does it mean more?
So, the necessary Royal Assent and accompanying regulations are complete. The new requirements can, and must, be applied, a day or two after being made, on top of a raft of changes to Accounting Standards. We have work to do, but we have reform. Is it enough?
The elimination of parent entity financial statements, dividend declarations reflecting post-IFRS realities, reform for charities and other companies limited by guarantees will be welcomed. Clarifying Australia’s compliance with IFRS can only help Australian entities compete on the global stage. Numerous technical amendments have their place. But where is relief for wholly-owned subsidiaries? Where is the simplification and reduction in words? Not this time.
Of course, the elephant in the room is the complimentary reforms to Accounting Standards promised by the AASB. At the time of going to ‘print’ with this update, the AASB had not issued Standards creating the new ‘Reduced Disclosure Regime’ - the ‘RDR’. An out-of-session vote was to be completed by close of business on 30 June and we shall see the results, perhaps today.
If all goes to plan, and after many years of sometimes acrimonious debate, the IFRS for SMEs will not be for Australian companies, at least not for now. Australia has taken a brave step of going it alone with its RDR. Will others follow? Only time will tell. And additionally, we still have the reporting entity concept – again, at least for now – to go along with the RDR.
So, Happy New Financial Year to many of you. Hopefully, the reforms will be welcome.
- Accounting alert 2010/08 – analysis of the Corporations Act changes and RDR (being updated as new developments happen)
- What’s new in the June 2010 financial reporting cycle - details of all new pronouncements and requirements to consider in 30 June 2010 annual and half-year financial statements.
(A listing of new accounting standards, interpretations, exposure drafts, discussion papers and similar documents issued during the month by the AASB and IASB/IFRIC, along with other IFRS-related documents by other bodies that may be of interest and related links to Deloitte publications and alerts. See also our What’s new in the June 2010 financial reporting cycle summary)
Australian Accounting Standards Board (AASB)
|Pronouncement||Key dates||More information|
ED 197 Presentation of Items of Other Comprehensive Income (proposed amendments to AASB 101)
Proposes to require a single "Statement of profit or loss and other comprehensive income" containing two distinct sections – profit or loss and items of other comprehensive income. The OCI section would be further split between items that may be recycled from those that would never be recycled.
|Comments to the AASB close on 2 August 2010 (comments to IASB close on 30 September 2010)||
ED 197 (PDF 235kb)
IFRS in Focus newsletter (PDF 66kb)
Corporations Act 2001 developments
|Pronouncement||Key dates||More information|
Corporations Amendment (Corporate Reporting Reform) Act 2010 and Corporations Amendment Regulations 2010 (No. 6)
Implements a number of financial reporting related amendments to the Corporations Act 2001 and associated regulations, including:
Note: The Corporations Amendment (Corporate Reporting Reform) Act 2010 received Royal Assent on 28 June 2010, but The Act has not yet been registered on the Federal Register of Legislative Instruments (FRLI). The Corporations Amendment Regulations 2010 (No.6) were made at an Executive Committee meeting on 29 June 2010, have been registered on the FRLI and became effective on the same date.
Note: ASIC is expected to make additional Class Order(s) dealing with certain technical matters arising from the new legislation in the near future.
Most of the amendments apply from commencement (date of Royal Assent, being 28 June 2010) or 30 June 2010
Some limited requirements increasing disclosures apply from 30 June 2011
International Accounting Standards Board (IASB)
|Pronouncement||Key dates||More information|
ED/2010/6 Revenue from Contracts with Customers*
Joint IASB and FASB proposals for a new revenue recognition standard implementing a common, comprehensive principle-based revenue standard that can be applied consistently to complex transactions across a wide range of industries.
The ED proposes a model based on the contract with a customer, with revenue being recognised when the customer obtains control of the goods or services.
The proposals may result in a change in the timing of revenue recognition for many entities. Deferral of revenue recognition might be expected for warranties and some items currently accounted for on a percentage of completion basis.
New guidance on licensing arrangements, multiple element arrangements, contract costs and onerous performance obligations may also impact many entities.
The proposed disclosures are also extensive.
|Comments to the IASB close on 22 October 2010||
IFRS in Focus newsletter (PDF 97kb)
US Heads Up newsletter
ED/2010/7 Measurement Uncertainty Analysis Disclosure for Fair Value Measurements*
Proposes relatively minor amendments to the proposals in the IASB’s May 2009 ED on fair value measurement. Under the originally proposed hierarchy, Level 3 inputs are 'unobservable inputs' used for the fair value measurement of assets or liabilities for which market data are not available. Required disclosures would include a 'measurement uncertainty analysis' (sometimes called a 'sensitivity analysis').
The newly proposed amendments would enhance the original proposal by requiring the measurement uncertainty analysis disclosure to reflect the interdependencies between unobservable inputs used to measure fair value in Level 3.
|Comments to the IASB close on 7 September 2010||
US Heads Up newsletter
* Equivalent pronouncement not yet issued by AASB
(A listing of meetings of various standard setters during the month or where documents were issued during the month in respect of the previous month’s meetings, with links to our analysis, agenda papers and so on)
IASB June meetings (1, 10, 15-17, 23 June 2010)
(included special meetings and joint meetings with the FASB)
|AASB meeting 15 May 2010||The key outcome from the meeting was the AASB moving forward with a plan to implement the Reduced Disclosure Regime (RDR) in time for early adoption at 30 June 2010. The AASB also agreed to issue (out-of-session) new Amending Standards to implement the recent IASB annual improvements and to update AASB 1048 Interpretation and Application of Standards.||
AASB Action alert (PDF 65kb)
|AASB special meeting 25 June 2010||
Special meeting to progress its consideration of its proposed revised differential reporting framework, with the objective of making the necessary Standards to implement the RDR in time for early adoption by entities in their 30 June 2010 financial statements.
The meeting did not make the necessary Standards, but instead dealt with a number of ‘sweep issues’ in order to approve those Standards on or before 30 June 2010.
AASB Action Alert (PDF 48kb)
(Key IFRS-related and other publications issued by Deloitte during the month, not covered elsewhere. You can find full details and back issues of our various publications by following these links: Accounting alerts, IAS Plus publications and IAS Plus Update Newsletters)
- June 2010 Special purpose model financial statements for Australian entities
- Issue 15 of the Insurance Accounting Newsletter (PDF 113kb) – focuses on the discussions the joint IASB-FASB meetings in May and early June 2010.
- Webcast on IFRSs: How might developments at the IASB impact you? (recording now available)
Other publications of interest
- Property Intellectual Issue 36 - Fair valuing investment property under construction
- Property Intellectual Issue 35 – a new regime for Managed Investment Trusts
- United States Accounting Roundup The Tidal Wave of Accounting and Financial Reporting Changes (PDF 184kb) - focuses on a number of projects that are currently under way at the FASB that will change US GAAP
- United States publication: Back on-balance sheet: Observations from the adoption of FAS 167 (PDF 259kb)
- United States publication: May 2010 Edition of Accounting Roundup (PDF 258kb)
- United States Heads Up Newsletter FASB Issues Proposed ASU on Accounting for Financial Instruments
- United States Heads Up Newsletter FASB Proposes Guidance on Fair Value Measurement and Disclosure
(A brief listing of other financial reporting developments during the month. A full summary of all IFRS-related developments can be found in our June historical summary on IAS Plus)
- Numerous ASX listing rule amendments came into effect from 1 June 2010, covering investment entities, mining exploration entities (an added requirement to Appendix 5B requiring mining explorers will have to include an estimate of the cash outflows for the next quarter for production and administration), security purchase plans and other matters (ASX Companies Update 06/10)
- The Australian and New Zealand Governments have signed a revised Memorandum of Understanding (MOU) on the Coordination of Business Law (Government press release)
International Accounting Standards Board
- The IASB has posted on its website its Amended Work Plan and Project Timetable as of 25 June 2010 reflecting the changes announced on 24 June 2010 and sent to the G20, as well as other changes to IASB-only projects. Our IAS Plus Agenda Projects Page has been updated accordingly
- On 6 July 2010, the IASB will host a live webcast on the Board's project to replace IAS 39 Financial Instruments: Recognition and Measurement (More information and registration)
Other global news
- The International Valuation Standards Council (IVSC) has published an exposure draft (ED) of proposed new International Valuation Standards (IVS) (Press Release [PDF 80kb], Exposure draft [PDF 850kb])
- Following their summit meeting in Toronto on 26-27 June 2010, the leaders of the G20 group of nations have issued a Declaration (PDF 509kb) reaffirming their support for a single set of global accounting standards as a means for strengthening the global financial market infrastructure